CLARCOR Inc. (NYSE:CLC) reported that its diluted
earnings per share grew 2% from the second quarter of 2011 to a record
second quarter high of $0.65. Higher diluted earnings per share were
achieved despite a 1% reduction in net sales as operating margin
expanded 0.3 percentage points from last year’s second quarter to 17.2%.
Second quarter earnings were impacted by lower operating results at the
company’s Packaging segment where net sales declined $4.2 million, or
18%, and operating profit declined $1.3 million, or 42%, from the second
quarter of 2011. These Packaging segment results negatively influenced
consolidated diluted earnings per share by approximately $0.02 compared
with last year’s second quarter.

Changes in average foreign currency exchange rates reduced net sales by
$3.9 million, or 1%, and operating profit by $0.8 million, or 2%, in the
second quarter of 2012 compared with last year’s second quarter. For the
first six months of 2012, changes in average foreign currency exchange
rates reduced net sales by $4.7 million, or 1%, and operating profit by
$0.8 million, or 1%, from the first six months of 2011.

Chris Conway, CLARCOR’s Chief Executive Officer, commented, “We
experienced headwinds across our top-line in the second quarter, as
sales growth in several markets including our global natural gas
filtration market were more than offset by the negative effects of
foreign currency exchange rates and softness in several markets
including our U.S. heavy-duty engine aftermarket filtration business,
our China first-fit OEM heavy-duty engine filtration business and our
Packaging segment. However, our execution remained strong as we improved
our operating margin to 17.2% from 16.9% in the second quarter of last
year. Our 34.5% gross margin percentage was consistent with last
year—our highest second quarter gross margin percentage in the last
twenty years. Our selling and administrative expenses as a percentage of
net sales declined 0.3 percentage points as we continued our culture of
managing administrative expenses while supporting profitable growth. We
anticipate this execution to continue throughout 2012 as we expect our
full year operating margin to improve from the record 16.1% operating
margin from last year.

“Our second quarter results were impacted by reduced domestic heavy-duty
engine filter volume sold through our aftermarket independent
distributors. Sales through these distributors—our primary domestic
sales channel—were approximately flat with the second quarter of 2011
after growing approximately 17% in the first quarter of 2012 from the
first quarter of 2011. Based upon discussions with our distributors and
other industry participants, we believe that the slower growth was
indicative of slowing industry demand. To highlight the decline in order
activity from the first to second quarter, our sales to independent
distributors in February 2012 increased 23% from the prior year while
our March 2012 sales declined 3% from March of 2011. Despite this
slowing industry demand, we believe we have maintained or increased our
market share through the first six months of 2012 as we have added net
independent distributors. In addition, we recently developed and
launched two significant OEM aftermarket programs previously held by
competitors. These two programs should support our domestic heavy-duty
engine filter market beginning in the third quarter of 2012 and going
forward.

“Our second quarter first-fit OEM heavy-duty engine filter sales in
China were $2.4 million, or 25%, lower than the second quarter of 2011.
These lower China sales were almost entirely driven by a decline in the
local production of diesel engines in 2012. Although conditions for the
remainder of the year are uncertain, we believe our customer
relationships remain strong, and we are well-positioned to capitalize on
China’s projected long-term heavy-duty engine filtration growth across
all products and markets including first-fit and the aftermarket.

“We continue to improve our financial performance at our
Industrial/Environmental Filtration segment where our second quarter
operating margin improved to 13.2% from 12.1% in last year’s second
quarter. For the first six months of 2012, our operating margin in this
reporting segment improved 1.6 percentage points to 11.1% and our
operating profit increased 21% from the first six months of 2011. With
our continued focus on profitable growth by introducing higher margin
air filtration products and the continued growth of our process liquid
filtration markets, we believe we are well-positioned to achieve our
long-term operating margin goal of 15% in this reporting segment in the
next three to four years. We believe that a significant contributor to
our expected continued profitable growth will be the further development
of our natural gas filtration business both in the U.S. and
internationally. In the U.S., our natural gas filtration sales are
expected to grow close to 10% in 2012 compared with 2011 as we continue
to focus on aftermarket element growth while further penetrating
upstream and downstream opportunities. Internationally, we are
particularly excited about our natural gas filtration growth potential
in Asia Pacific. Our natural gas filtration sales in Asia grew almost
50% in the second quarter compared with the second quarter of 2011 and
are expected to grow at a similar rate for the second half of this year
from the comparable period last year. In Australia, our second quarter
acquisition of Modular Engineering Pty Ltd. provides a solid platform
for us to take advantage of the high growth of natural gas extraction
and transportation that is underway in Western Australia and throughout
the region. We believe we are strongly positioned to participate in the
expected global growth in the natural gas filtration market—a market we
believe has as much long-term potential as any other filtration market.”

Second Quarter Results:

Engine/Mobile Filtration Segment

Net sales at our Engine/Mobile Filtration segment declined less than 1%
from the second quarter of 2011. Overall, we experienced 1% growth
domestically and a 2% reduction in sales outside the U.S. Our slower
domestic growth was driven by lower orders from independent distributors
due to softer industry demand. The 2% reduction in foreign sales (1%
growth when adjusted for changes in foreign currency) was driven by a
25% reduction in heavy-duty engine filter sales in China. Despite recent
monetary initiatives to address slower economic activity, our outlook
for China for the remainder of 2012 remains uncertain. Lower sales in
China in the second quarter were partially offset by higher heavy-duty
engine filter sales into other foreign markets including Europe and
Northern Africa where sales increased a combined 6% from the second
quarter of 2011.

Operating profit at our Engine/Mobile Filtration segment was comparable
with the second quarter of 2011. Our operating margin improved 0.2
percentage points from last year’s second quarter to 22.7%—the highest
second quarter operating margin in our Engine/Mobile Filtration segment
in at least ten years.

Industrial/Environmental Filtration Segment

Net sales at our Industrial/Environmental Filtration segment increased
1% from the second quarter of 2011. Overall, these higher net sales were
the result of less than 1% sales growth domestically and 3% sales growth
outside the U.S. Our growth in domestic sales was heavily influenced by
continued strong sales at our Total Filtration Services (TFS)
distribution business which has steadily increased sales and operating
profit over the last several years. These higher sales were offset by
lower sales of aviation and marine fuel filtration products and lower
natural gas vessel sales due to the timing of several large orders in
the second quarter of 2011. The 3% increase in foreign sales (9% when
adjusted for changes in foreign currency) was driven by an approximate
34% increase in natural gas vessel and aftermarket filter sales in
several international markets including Asia, Australia and Canada. In
addition, our European sales in this reporting segment rebounded in the
second quarter. After declining 9% in the first quarter compared with
the first quarter of 2011, our European sales grew by 8% from last
year’s second quarter. This sales growth was the result of strong dust
collector system sales at our United Air Specialist (UAS) business and
higher military marine fuel filtration sales in the U.K. Although
uncertainty persists for our outlook for the remainder of the year in
Europe, we are cautiously optimistic that our backlog heading into our
second half will facilitate the continuation of sales growth in the
third and fourth quarters.

Operating profit at our Industrial/Environmental Filtration segment grew
$1.6 million, or 10%, from the second quarter of 2011. Our 13.2%
operating margin in this reporting segment in the second quarter
increased 1.1 percentage points from last year’s second quarter
primarily due to a reduction in selling and administrative costs as a
percentage of net sales.

Packaging Segment

Net sales at our Packaging segment declined $4.2 million, or 18%, from
the second quarter of 2011. Similar to the first quarter, this reduction
was primarily driven by lower smokeless tobacco packaging sales, lower
confection packaging sales and lower sales in other markets due to
inventory and production scheduling adjustments. Lower smokeless tobacco
packaging sales were primarily due to one of our major customers
qualifying a second source supplier according to their corporate policy.
The $1.3 million reduction in operating profit and the 3.8 percentage
point reduction in operating margin compared with the second quarter of
2011 were primarily the result of lower sales.

Our operating performance in our Packaging segment significantly
improved from the first quarter as evidenced by our 8.9% operating
margin in the second quarter. We will continue to aggressively pursue
several significant sales opportunities in our pipeline over the
remainder of the year. Accordingly, we expect our Packaging segment
operating performance to continue to improve sequentially over the third
and fourth quarters of 2012.

2012 Guidance

Chris Conway commented on 2012 guidance: “Although our second quarter
earnings were the second highest in Company history, we experienced
softer demand in several of our geographic and product markets. We
believe most of this softer demand was influenced by generally uncertain
economic activity. However, our operational execution remained strong,
as evidenced by our continued improvement in operating margin despite
relatively flat sales. However, based upon our year-to-date financial
results and due to continuing economic uncertainty, we are reducing our
guidance for 2012 diluted earnings per share to $2.50 to $2.65 from our
previous guidance of $2.55 to $2.70.

"Despite lower full year financial guidance, we are cautiously
optimistic about sales growth in many of our markets in the second half
of 2012 compared with both the first half of 2012 and the second half of
2011. We anticipate that our domestic heavy-duty engine filter sales
will be supported by the launch of two significant OEM aftermarket
programs. We expect sales growth at our Industrial/Environmental
Filtration segment to be driven by sales of air filtration products to
the swine industry in addition to a backlog of aviation fuel, marine
fuel and petrochemical filtration sales in Europe, the Middle East and
Africa. Finally, our Packaging segment sales should sequentially improve
in the third and fourth quarters of 2012 as we recover from the turnover
of significant programs in the first half of the year.”

Anticipated sales growth from 2011 and operating margin by segment and
on a consolidated basis are as follows:

2012 Estimated Sales Growth

2012 Estimated Operating Margin

Engine/Mobile Filtration

3.0% to 5.0%

22.0% to 23.0%

Industrial/Environmental Filtration

6.0% to 8.0%

11.0% to 12.5%

Packaging

-12.0% to -10.0%

9.0% to 10.0%

CLARCOR

3.0% to 5.0%

16.0% to 17.0%

We project 2012 cash from operations to be between $125 million and $135
million, capital expenditures to be between $40 million and $50 million
and our effective tax rate to be between 32.0% and 32.5%.

CLARCOR will be holding a conference call to discuss the second quarter
2012 results at 10:00 a.m. CST on June 21, 2012. Interested parties can
listen to the conference call at www.clarcor.com
or www.viavid.net.
A replay will be available on these websites and also at 877-870-5176 or
858-384-5517 by providing confirmation code 1664629. The replay will be
available through July 5, 2012 by telephone and for 30 days on the
Internet.

CLARCOR is based in Franklin, Tennessee, and is a diversified marketer
and manufacturer of mobile, industrial and environmental filtration
products and consumer and industrial packaging products sold in domestic
and international markets. Common shares of CLARCOR are traded on the
New York Stock Exchange under the symbol CLC.

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements made in this press release other than statements of
historical fact, are forward-looking statements. These statements may be
identified from use of the words “may,” “should,” “could,” “potential,”
“continue,” “plan,” “forecast,” “estimate,” “project,” “believe,”
“intent,” “anticipate,” “expect,” “target,” “is likely,” “will,” or the
negative of these terms, and similar expressions.These
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements may include, among other things: statements and assumptions
relating to anticipated future growth and results of operations,
including the anticipated 2012 performance of the Company and each of
its segments, our projections with respect to 2012 estimated sales
growth and 2012 estimated operating margins for the Company and each of
its segments, and our projections with respect to 2012 cash from
operations, 2012 capital expenditures and 2012 effective tax rates;
statements regarding management's short-term and long-term performance
goals; statements regarding anticipated order patterns from our
customers or the anticipated economic conditions of the industries and
markets that we serve; statements related to the performance of the U.S.
and other economies generally; statements relating to the anticipated
effects on results of operations or financial condition from recent and
expected developments or events; statements regarding our anticipated
execution throughout 2012 of managing administrative costs while
supporting profitable growth; statements regarding uncertain conditions
in China for the remainder of 2012, the strength of our customer
relationships in China, and our ability to capitalize on China’s
projected long-term filtration growth; statements related to the
anticipated support to our domestic heavy-duty engine filter sales from
the launch of two significant OEM aftermarket programs; statements
regarding our ability to achieve our long-term operating margin goal of
15% in the Industrial/Environmental segment in the next three to four
years; statements regarding the further development of our natural gas
business in the U.S. and internationally, the anticipated growth of
natural gas sales in the U.S. and Asia in 2012, our ability to
participate in the expected global growth in the natural gas market, and
the long-term potential of the natural gas market; statements regarding
our outlook for China in the Mobile/Engine Filtration segment for the
remainder of 2012; statements regarding our uncertain outlook in Europe
for the Industrial/Environmental Filtration segment for the remainder of
2012, and that our strong backlog in this segment in Europe, the Middle
East and Africa along with expected sales growth driven by sales of air
filtration products to the swine industry could facilitate the
continuation of sales growth in the third and fourth quarters;
statements regarding our aggressive pursuit of significant sales
opportunities in our Packaging segment pipeline over the remainder of
2012, and our expectations regarding sequential improvements in our
Packaging segment over the third and fourth quarters of 2012; and any
other statements or assumptions that are not historical facts. The
Company believes that its expectations are based on reasonable
assumptions. However, these forward-looking statements involve known and
unknown risks, uncertainties and other important factors that could
cause the Company's actual results, performance or achievements, or
industry results, to differ materially from the Company's expectations
of future results, performance or achievements expressed or implied by
these forward-looking statements. The Company's past results of
operations do not necessarily indicate its future results.The
Company’s future results may differ materially from the Company’s past
results as a result of various risks and uncertainties, including the
risk factors discussed in the “Risk Factors” section of the Company’s
2011 Form 10-K and other risk factors detailed from time to time in the
Company's filings with the Securities and Exchange Commission. You
should not place undue reliance on any forward-looking statements. These
statements speak only as of the date of this press release. Except as
otherwise required by applicable laws, the Company undertakes no
obligation to publicly update or revise any forward-looking statements
or the risk factors described in this press release, including estimated
sales growth and estimated operating margin levels for 2012 for the
Company and its business segments, whether as a result of new
information, future events, changed circumstances or any other reason
after the date of this press release.

TABLES FOLLOW

CLARCOR INC. 2012 UNAUDITED SECOND QUARTER RESULTS

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

(Dollars in thousands except per share data)

Quarter Ended

Six Months

June 2,

May 28,

June 2,

May 28,

2012

2011

2012

2011

Net sales

$

284,855

$

288,533

$

542,119

$

534,253

Cost of sales

186,670

189,071

357,719

353,838

Gross profit

98,185

99,462

184,400

180,415

Selling and administrative expenses

49,074

50,682

100,977

100,344

Operating profit

49,111

48,780

83,423

80,071

Other income (expense):

Interest expense

(88

)

(221

)

(188

)

(265

)

Interest income

169

239

303

276

Other, net

(117

)

(228

)

495

(428

)

(36

)

(210

)

610

(417

)

Earnings before income taxes

49,075

48,570

84,033

79,654

Provision for income taxes

15,996

15,689

27,462

24,852

Net earnings

33,079

32,881

56,571

54,802

Net (earnings) losses attributable to noncontrolling interests

(152

)

(73

)

(165

)

(113

)

Net earnings attributable to CLARCOR Inc

$

32,927

$

32,808

$

56,406

$

54,689

Net earning per share attributable to CLARCOR Inc. - Basic

$

0.65

$

0.65

$

1.12

$

1.08

Net earning per share attributable to CLARCOR Inc. - Diluted

$

0.65

$

0.64

$

1.11

$

1.07

Weighted average number of shares outstanding - Basic

50,378,164

50,594,963

50,394,680

50,581,731

Weighted average number of shares outstanding - Diluted

50,980,347

51,282,383

51,037,366

51,284,811

Dividends paid per share

$

0.1200

$

0.1050

$

0.2400

$

0.2100

CLARCOR INC. 2012 UNAUDITED SECOND QUARTER RESULTS, continued

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

June 2,

December 3,

2012

2011

ASSETS

Current assets:

Cash and cash equivalents

$

140,574

$

155,999

Restricted cash

616

1,105

Accounts receivable, less allowance for losses of $10,266 and
$9,795, respectively

208,130

206,664

Inventories

210,896

200,274

Deferred income taxes

26,156

25,974

Income tax receivable

-

3,373

Prepaid expenses and other current assets

7,169

7,510

Total current assets

593,541

600,899

Plant assets, at cost, less accumulated depreciation of $303,845 and
$293,111, respectively